[GNC] Why or why not to do year-end closing journal entries? (Close Books?)

[Geoff]

Hi Eric

To close or not to close is entirely a personal decision.

 From https://wiki.gnucash.org/wiki/Closing_Books
"Using Close Book Option
Since 2.2.4, there has been a menu item for closing the books under 
{Tools->Close Book}. This item creates two zeroing transactions (one for 
expense accounts, one for income accounts). Each account in those 
portions of the accounts tree is reset to zero by transferring from the 
equity account of your choosing."

Try it yourself and see.  It is a non-destructive process that you can 
simply cancel, either by deleting the two transactions it generates in 
the Equity account you nominated, or closing without saving.

If you are interested in what other people do, this topic is discussed 
periodically:

https://lists.gnucash.org/pipermail/gnucash-user/2022-January/099274.html

Regards

Geoff
=====

On 5/12/2023 11:32 am, Eric Chapman wrote:
> Hi, again.
> 
> I think I read a discussion on the list about this, but now I cannot 
> find it.
> 
> I searched the PDF for these things: "year-end", "year end", "closing", 
> "end of the year". I was surprised how little I found.
> 
> I found this at "Duplicating an Account Hierarchy":
> 
>     In some cases, it might be useful to duplicate the structure of an
>     existing data file in a new file. For example, you might want to try
>     out new accounting techniques without corrupting your actual
>     accounting data, or you might need to follow accounting guidelines
>     that require you to close your books at the end of the year and
>     begin each year with a fresh set of books.
> 
> Other than that I also found this at "Other Considerations for Expense 
> Accounts":
> 
>     One point to consider is that as your use of GnuCash continues, the
>     balances in these accounts will grow, since there are usually very
>     few credit transactions that reduce the balances. There is nothing
>     wrong with this situation, but some users may wish to clear the
>     balances in their expense accounts periodically. Zeroing
>     transactions can be entered that transfer the balance of the account
>     to an Equity account. GnuCash includes a Closing Books procedure
>     that includes zeroing out expense accounts. Keep in mind that this
>     is not necessary, and that if you need to gather information on a
>     given expense account, you can use various reports to extract that
>     data without zeroing the account out.
> 
> (1) I'm from an old school accounting background, so I like the idea of 
> closing the books after all journal entries have been made for a fiscal 
> year. Is there a reason I should not do that?
> 
> (2) Is the "Closing Books procedure" referred to above the one under the 
> Tools menu called "Close Books"? I even searched the PDF documentation 
> for "close books" thinking that surely if there is a menu command named 
> that, then there will be info on how it's used and what it does, but 
> I've not found anything.
> 
> Once again I could use your advice.
> 
> And I remain grateful to the developers and the community of helpful 
> souls who seem very patient with us newbies to GnuCash
>